California to Receive Additional $153.8M in Final Settlement with Volkswagen

The California Air Resources Board (CARB) announced that it filed a consent decree for its final settlement with the Volkswagen Group of America.

The company will be required to pay an additional $153.8 million to California over the company’s use of illegal “defeat devices” in 2009-2016, 2.0 and 3.0 liter diesel passenger cars. Before today, VW had paid $533 million to California, of which $422 million will flow to the state through a mitigation trust.

The additional consent decree was negotiated by attorneys and technical experts from CARB and the California Attorney General’s Office, and is subject to court approval. The overall VW settlement is the largest ever for violations of vehicle air quality rules.

“This payment to the State of California closes another chapter in the so-called ‘dieselgate’ case against Volkswagen, but it is not the end of the story,” said CARB Chair Mary Nichols. “There are still consumers waiting to find out the future of their cars. CARB is working with U.S. EPA to determine if the remaining vehicles can be modified.”

“What Volkswagen did was categorically unacceptable,” said Attorney General Xavier Becerra. “At the California Department of Justice, we’ve been holding Volkswagen accountable since we learned of their inexcusable actions. One thing should be crystal clear: wrongdoers who believe they can run and hide are sorely mistaken.”

The $153.8 million dollars represents penalties for air quality violations and the costs of CARB’s investigation. This Consent Decree is in addition to:

1. More than $422 million dollars VW must pay into a national trust to mitigate environmental harm in California

2. $800 million dollars in Zero Emission Vehicle (ZEV) related investments that VW must perform in California pursuant to an investment plan approved by CARB

3. $25 million dollars VW has paid to CARB to support ZEV investment programs, including vehicle replacement programs, for low-income residents

4. Consumer relief, including restitution and modification or buy back of the affected vehicles

5. $86 million dollars it has paid to the California Attorney General’s office for civil penalties and costs

6. Any additional mitigation payments VW is required to make if it fails to modify or buy back at least 85% of the subject vehicles in California.

The Consent Decree also includes an injunction requiring the company to implement a corporate compliance program, conduct enhanced vehicle testing, and undertake a series of audit and reporting obligations to ensure future compliance with U.S. and California laws and regulations.

Background

The case began when VW made the decision to use illegal “defeat device” software to bypass emissions control equipment in order to create the appearance that its cars met California and U.S. health-based air quality standards. This started with its 2009 model year diesel vehicles. As a result, the vehicles spewed excess nitrogen oxide emissions (NOx) in amounts up to 40 times the legal standards. More than 500,000 of these vehicles were sold in the U.S., of which approximately 85,000 were sold in California.

As CARB technicians pushed the company to explain the excess emissions, it became clear that the company was not providing the full story. At that point CARB technicians began running specially designed test cycles independent of VW. When confronted with the results of those tests, the company was unable to explain what was happening and finally admitted it was cheating.

After VW admitted to the presence of defeat devices in the affected vehicles, CARB, the U.S. Environmental Protection Agency, the California Department of Justice, and the U.S. Department of Justice took legal action against the company, resulting in billions of dollars in court judgements, and civil and criminal penalties.